NFIB Responds to Wolf on Budget

The National Federation of Independent Business just sent the letter pasted below to Governor Tom Wolf. It is in response to the letter NFIB received from Governor Wolf yesterday.May 19, 2015.

The Honorable Tom Wolf
Commonwealth of Pennsylvania
Room 225, Main Capitol
Harrisburg, PA 17120

Dear Governor:

On behalf of the Pennsylvania members of the National Federation of Independent
Business, I want to thank you for your letter dated May 18, which outlined our
differences with you on a variety of fiscal issues.

NFIB’s membership is comprised exclusively of closely-held or family-owned
businesses. Our members’ companies are not traded on any public exchanges. They are small- and independent- businesses, which are the life-blood of Pennsylvania’s economy. NFIB represents the consensus views of its members and our positions are established by the membership through a ballot process. This democratic method of developing public policy has proven very effective over the 73 years that the organization has operated and ensures NFIB policy is not controlled by any single industry or single member of the organization or staff.

NFIB members in 2012 favored the impact fee over a severance tax because the impact fee ensured that most of the generated revenue would remain in the local communities affected by natural gas drilling. NFIB members oppose a severance tax because it ultimately would be paid by the land owners where natural gas drilling takes place or simply would be passed along to consumers. Unlike the local impact fee, the revenue generated by the severance tax would be directed to the state’s general fund.

I quite frankly am surprised by your assertions that our members and I have not been working together on our shared goals. I have had several conversations with your staff acknowledging favorable comments that NFIB members and I have made in support of your proposals to eliminate the Capital Stock and Franchise Tax and reduce the Corporate Net Income Tax rate. NFIB has been one of the most outspoken advocates for complete repeal of this tax for the last 15 years. Our favorable comments dating back to February have been reported in nearly every major daily newspaper across the state, including the Pittsburgh Post-Gazette, the Patriot-News and Philadelphia Inquirer/Daily News. Our support for these ideas also were included in testimony at six separate public hearings before the state Senate and House.

But your demand that business groups like ours accept your revenue proposal in its entirety or not at all suggests that your tax relief proposal is nothing more than a stalking horse.

The cost and complexity of Pennsylvania’s tax code are among the most pressing
small-business concerns. Your proposals to expand the sales tax base, repeal the
vendor discount and raise the Personal Income Tax rate would dramatically raise the cost of tax compliance for small-business owners and sap the working capital
small-business owners need to maintain their operations.

Under your proposal, a Pennsylvania family or a sole proprietor who must hire an
accountant or an attorney to help complete tax-related paperwork now would have to pay sales taxes on those professional services. In other words, under your proposal, the more complex the Pennsylvania tax code – the more

Letter to Gov. Wolf
May 19, 2015

revenue the state will generate from those individuals and business owners who need to hire tax professionals to sort all of it out.

But it’s not just NFIB members who are concerned about the cost of your fiscal
proposals. Recently, the Lincoln Institute of Public Opinion Research surveyed
business owners and CEOs about your tax reform proposal and here is what they had to say about your plan:

— 77-percent of state business owners and executives disapprove of the proposed
2015-16 state budget;

— 79-percent say the proposed state budget will harm Pennsylvania’s overall
business climate;

— 70-percent expect to pay higher taxes under the terms of the proposed 2015-16
state budget;

— 82-percent oppose your plan to raise personal income taxes; and

— 69-percent expect your proposal to result in a temporary drop property taxes
which will then rise again.

Finally, I am surprised you did not recognize NFIB for its outspoken support for
Senate Bill 1. Pennsylvania’s public pension deficit is the single-greatest
financial threat facing the commonwealth, school districts and ultimately taxpayers, including small-business owners. As reported by Pennsylvania Public Employees Retirement Commission (PERC), SB 1 would provide over $18 billion in savings over the next 30 years. Such a proposal would have an immediate positive impact to the state budget and local school budgets. Resolving the state’s pension crisis would be the most effective way for you to achieve the "big things" that you outlined in your May 19 letter. Our members and I would urge you to give the proposal your most serious consideration.

Governor, there are over 225,000 small businesses in Pennsylvania today. Imagine how powerful our state economy would be if we created a climate where each one of them could add just one new job. Let’s work together to tackle the state pension crisis instead of papering-over looming fiscal threats. Let’s work together to simplify the tax code instead of raising taxes and making the tax code more complex. Let’s work together to improve our state’s civil justice climate so that small businesses and communities would be free from the threat of frivolous lawsuits. You want to do big things in Pennsylvania. Why not work together with NFIB to fix these things that would enable the small companies already here to grow and thrive?


Kevin Shivers
Executive State Director